Fed Chairman Finds New Support on Hill

Posted January 25, 2010 at 6:33pm

An intense lobbying campaign by the White House — and some fresh high-level support in the Senate — appears to be turning the tide in favor of Federal Reserve Chairman Ben Bernanke, whose confirmation to a second term now appears all but assured.

Majority Whip Dick Durbin (D-Ill.), who just last week said he was undecided on how he would vote on Bernanke’s nomination, declared the chairman “the best person for the job— after the two met privately Monday afternoon.

“I want to keep Ben Bernanke in his position, sensitized to the very issues we talked about today so that he can help the Federal Reserve become an important part of the solution,— Durbin said.

Durbin said he and Bernanke discussed consumer protection issues and the transparency of policymaking at the Fed, in addition to the central bank’s reaction to the recession and its failure to act quickly to stem a housing crisis.

“I thought he was very frank and candid in acknowledging that mistakes were made,— said Durbin, who predicted Bernanke would be confirmed.

Durbin’s ringing endorsement will help secure Bernanke’s bid for a second term as chairman — which just last week seemed so uncertain it sent stock markets tumbling. Over the weekend, President Barack Obama stepped in to try to save the nomination and reverse the mounting concerns in the Senate Democratic Conference. Obama’s personal appeals appear to have worked. Several powerful Senators, including Majority Leader Harry Reid (D-Nev.), announced their support for Bernanke. Reid’s announcement seemed to prompt other Democrats to follow suit.

“They had a very big problem on Friday, but over the weekend they may have stopped the bleeding to some extent,— one Senate Democratic aide said. “But they are still whipping it. They still have a lot of Members who haven’t indicated what they’re going to do.—

Another Senate Democratic aide said Democratic leaders have “an agreement from the White House that the unemployment issue is going to be paid attention to by the Fed chairman.—

The nomination has caused significant divisions within the party, Democratic aides said. While liberal Members such as Sens. Barbara Boxer (Calif.) and Russ Feingold (Wis.) have come out strongly in opposition to the nomination, moderate lawmakers have stuck by Obama’s pick.

A Democratic aide to one moderate lawmaker charged that liberal opposition to Bernanke was partially spurred by frustration with the economy, as well as a move to take a harder, more populist stance. And while taking a hard line with Obama’s Fed nominee may seem to make political sense, this aide argued it could have disastrous consequences. “This isn’t just political. If he fails, the world markets tailspin,— the Democratic aide said, adding, “This wasn’t his fault. Liberals can look for someone to blame, but it’s not him.—

[IMGCAP(1)]The administration also warned Senators against trying to use the nomination to score political points. “I believe that it sends a signal to greater and overall stability to have his nomination approved without political games, and that’s what we expect will happen later this week,— White House Press Secretary Robert Gibbs told reporters Monday.

Durbin said he is urging Democrats to avoid “a protest vote— against Bernanke. With Senate Democrats planning to unveil a jobs package this week, Durbin said he is reminding his colleagues of “the ample opportunities in the months to come to speak out in a very forceful way as to how to move this economy in a different direction.—

Still, Durbin noted Monday that “we’re going to need Republican support— to move Bernanke’s nomination, which Democratic leaders hope to bring to the floor by the end of the week, after clearing a controversial but crucial increase in the nation’s statutory debt limit.

With their own Conference deeply divided over the nomination, GOP leaders have taken a hands-off approach, aides said, adding that Minority Leader Mitch McConnell (R-Ky.) has not whipped the vote.

Although Banking, Housing and Urban Affairs ranking member Richard Shelby (R-Ala.) and Sen. John McCain (R-Ariz.) have both come out strongly against Bernanke’s nomination, a senior GOP leadership aide said there has not been an organized effort to drum up opposition. “I don’t think there is a huge whip operation on the con side,— the aide said.

Budget ranking member Judd Gregg (R-N.H.) has been a vocal proponent of Bernanke. In a television appearance Monday, Gregg suggested there may have been “a bit of exaggeration— about the level of opposition to Bernanke and declared that the Fed chairman “always had a pretty solid vote on the Republican side of the aisle.—

Appointed in 2005 by President George W. Bush, Obama announced he would renominate Bernanke to a second term last year. Bernanke’s nomination is the subject of several holds, which means Reid likely will have to file a procedural motion to move ahead with his confirmation.

Bernanke’s current term expires Jan. 31.

Emily Pierce and John Stanton contributed to this report.